Mr. Yanukovych Goes to Washington

The Yanukovych Administration’s image in the West is made by Americans, paid for by Ukrainians and watched closely by Russians

This angry speech about “hirelings” made by Viktor Yanukovych at the Poland-Ukraine Forum in Warsaw was, of course, about the opposition. Luckily for Ukraine’s President, he is far from alone in fending off his “slanderers.” The Foreign Ministry is one of his most proactive allies, tireless in its use of diplomatic professionals, including Minister Hryshchenko himself, as mouthpieces to deny any criticisms directed at the current Administration in the Western press. Indeed, the Ministry has even taken to directing Western reporters with explanations about how they should “properly” write about this government (see http://ukrainianweek.com/politics/17707).

Other allies in the cause of whitewashing the reputation of the Bankova1 abroad are the Russian comrades whose role in the debate about Ukraine at the Council of Europe Parliamentary Assembly last October was described by Ukrainian journalists. It was there that Yulia Novikova, PR Deputy and sister of Mr. Yanukovych’s Chief-of-Staff Serhiy Liovochkin, discussed with Konstantin Kosachov, the head of the Russian delegation to PACE, and Alexander Pochinok, a member of Russia’s PACE Monitoring Committee, how to force the Europeans to soften their resolution about the interference of the SBU, Ukraine’s security service, with Ukraine’s media. When President Nicolas Sarkozy awarded Viktor Yanukovych France’s highest decoration, the Legion of Honor, few days later, Alla Lazareva, a Paris-based Ukrainian journalist, revealed in her BBC blog that a French MP known for lobbying Russian interests had “arranged” this award for the Ukrainian President.

In addition to political connections, lobbying is also a useful tool. Common belief is that the purpose of lobbyists is to arrange meetings for their clients with politicians and state officials and that it’s then up to the clients to promote their ideas. In the US, lobbying is a legal business and such companies are required to report about both their revenues and their clients. Lobbying firms miss no opportunity to monitor all such reports as they are keen to reveal any violations by their competitors. Meanwhile, politicians and other officials are well aware that they are the target of lobbying efforts and don’t place much trust in blandishments. In short, expecting that lobbying alone will get the necessary decision made is not realistic.

Still, business is business. The key factor is to make the client believe that lobbyists are omnipotent. In the US, there are numerous PR agencies ready to take on image-making on behalf of a paying client, whether in the US, in the client’s home country, or anywhere else in the world. A closer look at the way Ukraine’s current Administration is operating in this area suggests more than a whiff of Russian influence.

Outsider ways for the homeboys

Ten years ago, Western PR tactics were new to Ukraine. Even party conventions looked like late soviet-style Party activist get-togethers: no carefully prepared scripts, professional lighting and transparent prompters for the speakers. It all started to change after Kuch­­ma­­gate,2 when Ukraine’s then-President found himself a pariah in the West.

Initially, there were some comic incidents, such as in the wake of election campaign 2004, when Kyiv journalists attended a grandiose press conference held by Bernard Whitman, the president of Whitman Insight Strategies. Mr. Whitman announced that his company had run an opinion poll in Ukraine and found that Candidates Yushchenko and Yanukovych had equal ratings. No supporting data about the survey were offered and shortly afterwards, it became known that Whitman Insight Strategies specialized in marketing and advertising and had no relation opinion polls.

Something similar happened in 2010, when the Azarov Government hired Trout Cacheris, a US firm, to audit the work of its predecessor, the Tymoshenko Government. Firstly, however, Trout Cacheris is a legal and lobbying firm, not an auditor. Company representatives announced that, for their UAH 23mn—US $3 million—in taxpayer money, they would only “coordinate” the work of others. The “others” turned out to be Akim Gump Strauss Hauer & Feld, an international law firm whose client list includes Rinat Akhmetov, and Kroll, the detective agency asked in 2001 to investigate Kuchmagate by Viktor Pinchuk, a multimillionaire and Mr. Kuchma’s son-in-law. At the time, Kroll declared that “there is no basis to talk about Mr. Kuchma’s part in the murder of Georgiy Gongadze.”

Among the Western firms engaged by the current Administration to “persuade” Ukrainians is the mysterious American Institute in Uk­­raine. Over the past few years, it has held a series of roundtables and press-conferences in Kyiv to campaign against joining NATO. On January 31, 2011, Executive Director Anthony Salvia wrote an opinion piece for the Kyiv Post arguing that Viktor Yanukovych should be awarded Nobel Peace Prize for cutting the Kharkiv deal and bringing Ukraine closer to Russia. The original idea for this came, of course, from PR Deputy Valeriy Bondyk back in July 2010.

Outsiders among the homeboys

USlobbyist Paul Manafort is arguably one of the best known unofficial Western advisors to Mr. Yanukovych in Ukraine. In 2005, Mr. Manafort and the consultancy in which he was a partner drafted a list of recommendations for Rinat Akhmetov’s Systems Capital Management (SCM) to enter international markets. This was how the American lobbyist, who had worked for several Republican presidential candidates and been involved in an influence peddling scandal at HUD,3 met Rinat Akhmetov, the owner of SCM.

It was Mr. Manafort who made Party of the Regions, completely soviet before, switch modern technologies in its commercials and rallies. He taught Mr. Yanukovych to smile in public and raise his hands in the American-style gesture of greeting when speaking in public. In a rare comment to the New York Times, Paul Manafort said that he was not just making money in Ukraine, but “trying to play a constructive role in developing democracy.”

Bruce Jackson, President of the Project on Transitional Democracies, is another “builder.” In an interview for Den’, a national paper, on February 2, Mr. Jackson compared the “Yanukovych the Common Man” to the US President Harry Truman. He said that Mr. Yanukovych was building a Ukraine that is similar “not to the new Belarus, but to the new Poland,” but he was getting no support and that Yulia Tymoshenko and her “organized” supporters were “destroying Ukraine” with their criticism of this Administration.

Mr. Jackson said in his interview that he had talked to Mr. Yanukovych for an hour that same day and was “moved” by the President’s deep concerns about the high level of corruption in Ukraine. The American also met with SBU Chief Valeriy Khoroshkovskiy. The real purpose of these top meetings was not disclosed. Den’ journalist Mykola Siruk insists that he organized the interview with Mr. Jackson at his own initiative. Among others, Bruce Jackson is a one-time American secret agent and former Vice President of Lockheed Martin, the aerospace company. He has close ties to the Pentagon and played an important role in lobbying NATO membership for the Baltic States.

According to the Wall Street Journal, which referenced official documents, a charity fund run by Mr. Jackson and his wife received US $300,000 from Rinat Akhmetov in 2005. When Mr. Yanukovych visited the US at the end of 2006 as Premier, local papers wrote that it was Mssrs. Jackson and Manafort who arranged his meetings with American officials, including Vice President Dick Chaney. Nothing personal—just business!

Strange ways for strangers

Contacts between Republican Party hawks and Kremlin loyalist oligarchs can probably be considered the same kind of business. In April 2007, the WSJ disclosed an investigation into how Bob Dole, a Republican candidate in 1996 election, helped Russian aluminum tycoon Oleg Deripaska get his ban on visiting the US lifted. The Wall Street Journal states that Deripaska paid Mr. Dole, a well-known lobbyist at that time, US $300,000 in 2005 as a retainer and another US $260,000 when the Russian oligarch finally had his US visa.

The WSJ article also argued that cooperation between Putin’s circle and US lobbyists was even more significant during the process of Montenegro separating from Serbia, when Russian oligarchs gained control over its industry and tourist coastline. The names are familiar here, too: Mr. Deripaska invested considerable capital in buying Montenegrin assets, encouraged by Mr. Putin, who wanted a foothold on the Mediterranean. In 2006, Russian oligarchs paid Rick Davis and Davis Mana­­fort, the firm whose partner is Paul Manafort, several million US dollars to organize Montenegro’s independence referendum.

Other lobbyists mentioned in the WSJ article include Leonid Reiman, one-time Telecoms Minister in Russia, who was considered one of the richest people around newly-elected President Putin in early 2000’s. By mid-decade, Mr. Reiman, whose companies were being accused of money-laundering in the US, turned to Barbour Griffith & Rogers, another US lobbyist, through the Alfa Group. One of the founders, Haley Barbour, is now Governor of Mississippi. The company was paid the total of US $2mn.

This is where our main heroes come back into the picture. In 2002-2003, Barbour Griffith & Rogers was working on behalf of an organization called “Friends of Ukraine.” In 2006, American journalists discovered that the legal address of this unknown organization was at the offices of Barbour Griffith & Rogers, and one of its founders was BGR’s Executive Director. Prior to disappearing as mysteriously as it had appeared, in 2004, Friends of Ukraine paid Barbour Griffith & Rogers US $320,000, but no one knows what for. At that point, Foruper Group Ltd., a British offshore company, paid Barbour Griffith & Rogers US $820,000.

The American investigative journalists also revealed via data from the US Department of Justice that this typical fly-by-night company was founded by an attorneys working for the infamous Semion Mogilievich whose gas deals once shook the West. Back then, the US press covered this, but not as much as the Russian press did. In 2005, Ukrainians were fingered in this case, too, including people rumored to have been involved at home in all these machinations for many years.

All homeboys?

In 2005, Barbour Griffith was paid an additional US $98,000 through yet another offshore company. This time, US journalists managed to trace the payer. It was the now-defunct Republican Party of Ukraine led by Yuriy Boyko, Fuel and Energy Minister in both Yanukovych Governments, as well as today.

Nor did the notorious RosUkrEnergo co-owner and gas and chemical industry tycoon Dmytro Firtash miss the party. In 2004, Neil Livingstone, an American security expert, quoted the Wall Street Journal that the Yankee friends of Russian tycoons at Barbour Griffith and Highrock Holdings, a Cypriot company controlled by Mr. Firtash, are related.

On their own, all these connections don’t add up to much. But 2002-2004 was when Russia first launched a serious attack on Ukraine’s gas transit system (GTS). When the idea of a joint gas transit consortium failed—not the least due to pressure from the US—Ukraine became involved in some very opaque schemes, such as RosUkrEnergo, where Mssrs. Boyko and Firtash figured as well, which eventually put the country’s energy independence at risk.

In 2009, the “gas lobby,” aka the Firtash group in Yanukovych circles, began to compete for influence with Mr. Akhmetov. This group ostensibly includes Chief-of-Staff Serhiy Liovochkin, who is in charge of the President’s foreign visits, among other things. At the end of 2009, with Mr. Manafort’s help, Mr. Liovochkin went to Washington to arrange a visit for Mr. Yanukovych, who was then in opposition. In the end, the trip never took place, but the efforts of his boys paid off for the PR leader when he traveled to the US in April 2010 as President. It was then that Mr. Yanukovych brokered a deal to transfer Ukraine’s enriched uranium to the US and was treated to a photo op with President Obama.

The work of US lobbyists on behalf of the Yanukovych Administration is undoubtedly also appreciated. However, in this tightly-knit circle of interests among American officials, lobbyists and spin doctors, Russian and Ukrainian oligarchs, and ultimately Gazprom and the Kremlin, Viktor Yanukovych could find himself far from being the key client.